Lydia Cladek's victims still feeling stung

FBI: If it's too good to be true, beware

Jane Edney and a group of friends in St. Augustine talk about Lydia Cladek and the Ponzi scheme that victimized them. More and more, people are falling prey to investment fraud, which is the topic of a summit Wednesday in Jacksonville.

Getting Jane Edney and six of her friends to share their ages during a chat at the senior’s St. Augustine home back in March was no great conversation starter. It took about 10 minutes.

But once the topic shifted to Lydia Cladek — their former “friend” now convicted of investment fraud — there was barely room to get in a word.

“I believed in her, so I felt betrayal, disappointment,” said Peggy Berry, 84. “How could she do this? This wasn’t the kind of person she was.”

Not all of the women would divulge exactly how much was lost to them individually, but as a group they said the total investments among them that Cladek never made good on was about $1 million. Looking back, they said there were many red flags.

On Wednesday, the U.S. Attorney’s Office, FBI and Florida Department of Law Enforcement are holding a summit to educate the public on such scams. It’ll be 8:30 a.m. to 1:30 p.m. at the FDLE’s regional office in Jacksonville at 921 N. Davis St.

“Because of the friendship, we were seeing things we did not want to believe,” said Janet Lydecker, 81.

Belief, however, was Cladek’s game. It’s the game of any Ponzi schemer — keeping their victims’ minds on the prize and away from their use of common sense, which federal authorities identify as an investor’s best defense against such cons.

“If it seems too good to be true, it probably is.”

That cliche was used by three FBI agents and a federal prosecutor recently interviewed on the topic. They said there are questions an investor can ask and background checks on a broker or firm can easily be done, but schemers are good liars and positive feedback often serves as aid for their fraud.

“You can’t just look at past performance because if you did, you’d be impressed by it,” FBI Special Agent Bridgette Trela Frost said.

Frost and two of her fellow agents described the tactics used by investment schemers. They include exclusive, unrealistic offers, creating an image of success and working by referral among groups to which they have access.

The exclusive offer

Cladek’s deal came in the form of high-interest car loans. She got investors to buy into the notes and paid them out of the interest, minus a commission — a practical idea.

Her problem was that she got greedy, her victims said. She began using their money on personal purchases instead of buying the car notes, eventually winding up with a loan inventory worth tens of millions less than what she had received from investors.

FBI Special Agent Jeff Westcott said schemers will often offer high returns to invest in something they have the “market cornered on,” or something with an “exotic flavor.”

“They will appeal to people’s sense that they’re getting some kind of insider deal that the public doesn’t have access to,” he said.

A recent indictment said retirement specialist Anderson Scott Hall promised investors returns from 6 percent to 18 percent. In the highly publicized case of Kenneth Wayne McLeod, who committed suicide in 2010 as the walls of an investigation were closing in on him, clients were told their investments would be backed by government bonds.

Portrayed success

Like Cladek, Hall and McLeod were said to have presented themselves as successful, lavishly living businessmen.

Hall’s real estate and luxury car purchases, however, pale in comparison to McLeod’s, which included boats, cars, houses, Jacksonville Jaguars home game suites and five Super Bowl trips, to which he brought his buddies along.

Cladek, owned two houses on the west coast of Florida to complement her St. Augustine Beach home complete with expensive artwork, high-end furnishings and bed sheets that cost $2,000.

She also gave to charities, something that struck a positive chord with her victims.

“That’s part of their advertising of their success, ” Frost said.

Cladek’s former friends said it was they who approached her, seeing all of her success, hearing about it from all of her other investors.

The targets

One of the women was Cladek’s neighbor when she introduced her to the group at a social club meeting about 12 years ago. Cladek was reserved, though, allowing her reputation as a savvy investor lure her victims to her.

She struck where she had access, as Frost said most con artists do.

“If they’re in a certain church, they have access to the church people,” Frost said. “If they’re in a certain social group within a community, that’s who they start with.”

Hall is accused of preying on retired Duval County school teachers and administrators, persuading them to roll their retirement accounts into his companies. For 22 years, McLeod boldly sold himself to federal employees, a large portion of whom were federal law enforcement officers.

Ohio attorney John Chapman successfully represented about 100 of McLeod’s victims in a civil lawsuit against one of his former employers following his death. Chapman said while McLeod’s case was certainly unique targeting law enforcement, a referral system is a common, necessary element of investment scams.

“There’s nothing more powerful than when your next-door neighbor leans across the fence and tells you about it,” he said.

Cladek’s ladies, looking back, said the most painful thing is the hundreds and thousands of dollars lost by friends and family they referred to her.

That’s what hurt the most, they say — infecting their loved ones with her “evil.”

TIPS, RED FLAGS

■ “If it seems too good to be true, it probably is,” law enforcement personnel stress.

■ Ask lots of questions.

■ Ask for things in writing.

■ Ask for a broker number.

■ Do simple Internet searches to see any complaints that might be accessible.

■ Be concerned if a broker stalls when asked to return funds, entices to keep money in the investment or asks for help in bringing in new investors.

■ Be concerned when a broker asks not to tell anyone else about their “exclusive” offer.

■ Be aware that positive reviews found on brokers can be just as dangerous as negative reviews. A good reputation is often an important tool working for a schemer.

What: A fraud summit will educate the public about schemes that have arisen in increased numbers as the result of the national economic crisis. They include investor fraud, identity theft, cyber intrusion and financial exploitation of the elderly.

Who: The U.S. Attorney’s Office, FBI and Florida Department of Law Enforcement.